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magento & ecommerce

Pros and Cons of Engaging in Ecommerce

Although getting into ecommerce is generally considered a step forward in today’s world, there are both advantages and disadvantages to it. Worldwide online sales may grow in the trillions into 2021. But that doesn’t mean that every business will see exponential growth as a result of turning to ecommerce.

You can grow more by using an online store but you also have to do it the right way, i.e. use the right platform and understand the pros and cons of what it implies.

The Pros of Engaging in Ecommerce

Reaching a Larger Market

A brick and mortar shop will only accommodate so many people, no matter how great your products or services are. But with ecommerce, you can potentially target a worldwide audience.

The digital marketplace allows you to connect with mobile shoppers all over the country and across the border. All the while, it makes the customer shopping experience very simple and interactive.

Lower Operating Costs and Around the Clock Revenue

One of the biggest attractions to ecommerce is the lower operating costs. You don’t have to worry about store design, retail store rent, and high staff numbers. The beauty of ecommerce is that most online stores can run themselves to a great extent, except for product delivery and the like.

Another thing that you can do is the hiring of remote employees. This could also save you money and keep employees happy since they can work on their own schedule and from the comfort of their homes.

It’s also worth noting that with an online store, there’s potential for 24/7 business since you can target a wider customer base and have shoppers log in from all time zones (or at least the ones that you want to sell to).

Better Advertising and Marketing Strategies

It’s much easier to target a specific audience using ecommerce. With an advanced ecommerce platform such as Magento, you gain access to consumer trends and analytics. This is data that you can access and use to create customized advertising or pricing strategies.

It also takes less time to come up with the next sales strategy since you can access and filter thousands of data sets at any time. The same customer tracking analytics can also be used to drive more traffic to your website and speed up your customer acquisition and sales.

Easy to Integrate and Effectively Use Soft Sells

Not everyone likes going to a physical store and interacting with salespeople. Yes, it can be a great way to get information on products but salespeople may also be compelled to promote certain products and potentially make customers uncomfortable.

With ecommerce, you can be as invasive or non-invasive as you want with your advertising and promotions. You can use the soft sale approach and fewer ads on the website to allow customers to browse freely without any sales pressure.

This enhances the customer experience and your ability to retain customers. If you want to eventually grow your business, customer retention is one of the first things that you need to get a handle on.

Simple and Effective Showcases

One of the easiest things that you can do with ecommerce is the showcasing of your best-selling products and services. Everything about an online shop is in plain view so you can make it your mission to always display the top products first and for every category if you so wish.

This is something that’s much harder to do in a retail store as it involves a lot of thought in store design and shelf space arrangement and rotation.

It’s also possible to make shopping go much faster for your customers to keep them coming back for more. There are plenty of secure and speedy payment processors available for ecommerce businesses, including simplified checkout processes.

For repeat customers, checking out at an online store can be the fastest shopping experience, with no line and the option to save payment data for future purchases.

The Cons of Engaging in Ecommerce

No Testing Before Buying

In some industries, ecommerce isn’t the number one choice. Customers may need to test out certain products before buying. And this is harder to offer in an ecommerce business. You may have to absorb high return rates if you’re to send products out with a liberal trial period.

Of course, this may not be such a big issue in the years to come as Augmented Reality has come a long way and could potentially alleviate this problem.

Competitive Environment

Staying ahead of the competition is everything in the digital world. You can’t always assume that you have the best product and you always have to keep an eye out for the prices at competing stores.

Customers have plenty of options to price check their favorite products and compare dozens of stores at the same time. Making sure you’re a top contender in those comparisons takes a lot of market research and it may not even be the right strategy to compete on price.

Ideally, you will want to be known for something else other than price – best customer service, fastest shipping, easiest returns, etc. – but any of that would take time and money to establish.

In any event, this is not all about sales either. It can sometimes be hard to drive traffic to your ecommerce business if you don’t know how to generate leads and rise in rankings on search engines.

Not All Customers Like to Wait

For some people, finding and buying the products that they need in a few seconds means nothing if they have to wait days for it to arrive.

Shipping is still one of the biggest issues of any ecommerce business. Not even a company such as Amazon can offer same-day shipping to all of its customers and for every product.

This is one of the clear advantages of operating a retail store. Customers can just walk into a big box store and leave with the product. However, this may not be the biggest drawback since you can target many more customers online.

You just have to figure out a way to not grow too quickly such that you can’t meet customer demands. Poor reviews regarding shipping times and services can turn people away to competitor stores in short order.

Welcome to Complex Taxation, Compliance, and Regulations

Just because you can market and sell your products all over the world doesn’t mean that it’s always the best thing to do. Different countries, or even different states and territories, have their own regulations.

You need to be familiar with all of them or hire a firm that does. This also shines a light on the accounting complexities that may come up with state sales tax and such. The good news is that you don’t have to sell everywhere if you can’t handle it. This can all be worked out in the checkout or even the access to your website.

Ecommerce – Is It for You?

Ecommerce is not the next logical resolution for every business. But many businesses that involve the sales of goods and services can benefit greatly from a more prominent digital presence.

Although there are both ups and downs in establishing an ecommerce business, the pros tend to outweigh the cons. Especially if you have the right platform for your business and assemble a team familiar with ecommerce best practices.

The potential for earning revenue 24/7 is reason enough to consider this the next stage in your company’s growth. And with the lower operating costs, it’s certainly easier to start a business in the online medium if you don’t have a lot of capital.

By interactivated • on November 30, 2020

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